Tech firms duck taxes

Jeremy Mehrle, a collector of Macintosh and other Apple computers, poses for a photo behind a bar of classic products. Apple reported $40.4 billion in holdings overseas and had an effective global tax rate of 12.6 percent over the past three years. (AP File Photo/Jeff Roberson)

Jeremy Mehrle, a collector of Macintosh and other Apple computers, poses for a photo behind a bar of classic products. Apple reported $40.4 billion in holdings overseas and had an effective global tax rate of 12.6 percent over the past three years. (AP File Photo/Jeff Roberson)

A similar amnesty was offered in 2004. A 2009 study by the National Bureau of Economic Research found that 92 percent of the $300 billion that companies transferred to the U.S. under that amnesty ended up with shareholders.

Kleinbard said it’s a common misconception that assets held by foreign subsidiaries of U.S. companies remain outside the country. In reality, much of the money is invested here in the form of U.S. Treasury bonds and government-backed securities. The difference, he said, is that the investments go untaxed.

“The money is not sitting in a strongbox buried in the sand,” he said.

A study of Apple, Google and about two dozen other companies by Levin’s Senate subcommittee in 2011 found that 46 percent of the money the firms held “overseas” actually was invested in U.S. Treasury bonds and other government-backed assets, such as mutual funds and stocks.

“The data shows that, in many cases, the funds that corporations identify as being offshore are really onshore,” the report said. “The presence of those funds in the United States undermines the argument that undistributed accumulated foreign earnings are ‘trapped’ abroad, because nearly half of those funds are already located right here in the United States.”